Build smart real estate: strategies to capture

Residential housing market in Thailand will likely recover after having slowed down from the expiration of stimulus measures by the government.EIC expects residential transfers value are projected to recover at around 7% in 2018 supported by an economic recovery, an expansion in transportation infrastructure, smaller household size, as well as demand for residentials in high potential locations which encouraged developers to continue launching residential projects and resulted in intensifying competition. Moreover, the market situation which currently depends on demand from home buyers becomes a difficult proposition for the development of new projects going forward. Thus, developers need to be more cautious in launching new projects, focusing on creating differentiation and deeper understandings of consumers. EIC found that the 3 key strategies to enhance competitiveness include 1) the design that mainly respond to targeted consumer's demand 2) forming business partners to develop new products, transfer knowledge, gain access to new buyers, and improve brand images 3) developing new after-sale platform to increase sales opportunity and use Big data to improve products and services.

EIC found that different lifestyles of consumers of different ages as well as technological innovation will all influence the development and sales of residential projects in the future. Condominium will still dominate the market although most buyers will prefer to live in low-rise residences. Also, consumers are giving more importance to residence with communal areas and to live close to communities, food and beverages zone in addition to merely living close by the sky train. Moreover, role of technology like smart home is likely to become the new normal in the future, particularly relating to security and energy management. Furthermore, consumers will increasingly compare and search for information via the digital channel which will become a Big data enabling real estate businesses to better understand consumers.

Although most Thai consumers prefer to live in low-rise residences such as detached houses, condominium will still dominate the marketespecially market for the new generation entering the working age where condominium seems to be the most ideal choice given location and purchasing power. Meanwhile, the Gen X and the Baby Boomer prefer condominium to meet various needs such as less burden on household chores, buying for investment, while some are buying for their children. However, according to EIC's survey, if there is not much constraints, most consumers prefer to own low-rise residences where 87% of the respondents are interested in buying low-rise residences especially detached houses.

Development of the residential project must focus on meeting the need of consumers rather than just for the purpose of living in order to respond to changing consumer behavior including rising importance of communal areas, and locations close to facilities. Thai consumers value the work-life balance and are increasingly accepting social sharing. As a result, areas and functionalities of the communal areas in the project have greater influence on residence purchasing decision. Thus, developers should consider the design with multiple functionalities such as the co-working space and co-recreation in the residence as well as areas that can accommodate sharing in other aspects in the future such as communal parking spaces. Moreover, not only the convenient location close to the electric train or close to offices, location close to communities are also important ­–such as department stores, restaurants, or healthcare centers. As a result, mixed used projects are likely to become more popular.

Technology has come to play a role, both in smart home and prop tech. As for smart home, although smart home is not yet popular, but it has earned much interest from the new generation. According to the survey, 90% of the consumers aged under 30 found that smart home devices influence their home purchasing decision especially the alarming system and energy management system. Moreover, the digital channel also has increasing role in home purchasing decision as consumers increasingly compare information where 50% of the survey respondents visited the projects after receiving online reviews. Thus, developers are now focusing on developing new prop tech platforms such as presentation of information for consumers to easily compare among projects and presentation on after-sale services in a range of styles, as well as the adoption of prop tech as a tool to manage the project.

Intensifying competition in the residential market encouraged developers to focus on differentiation strategies where 3 key strategies to that should not be overlooked include 1) the design that mainly respond to targeted consumer's demand such as the universal design that best satisfies the use by various groups of consumers. 2) forming business partners to develop new products, transfer knowledge, gain access to new buyers, and improve brand images such as collaboration with start-ups to offer innovative technology in residences such as Smart home, and 3) developing new after-sale service platform to increase sales opportunity and use Big data to improve products and services.Examples include development of central platform that combines all after-sale services or the use of Big data to analyze consumers behavior or problems arising from after-sale services to develop residential projects that meet consumer demand in the future.

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